Intellectual property law is good. Excess in intellectual property law is not. This blog is about excess in Canadian and international copyright law, trademarks law and patent law. I practice IP law with Macera & Jarzyna, LLP in Ottawa, Canada. I've also been in government and academe. My views are purely personal and don't necessarily reflect those of my firm or any of its clients. Nothing on this blog should be taken as legal advice.

Wednesday, May 02, 2012

AUCC Settlement with Access Copyright – Questions and Answers - or Still More Questions?

I have been provided with a very recent AUCC (“Association
of Canadian Universities and Colleges of Canada”) Q&A sent to its members regarding
its April 16, 2012 deal with Access Copyright (“AC”). Many members of AUCC are very
concerned about the #ACdeal (Twitter hash tag). Presumably most of the three
dozen or so “opt-out” institutions and many of the others are unhappy. I will
call them “dissenters” – even though they may even be a majority of the AUCC
membership. The basic irony is that they didn’t even get a chance to dissent
because there was no opportunity for them to discuss the deal. Does this Q&A
document answer their understandable questions?

Here is the original Q&A. My own comments are interlineated below in red italic bold
faced font.

As this blog always points out and occasionally emphasizes, this is NOT
legal advice. These comments are far from detailed. This is not the forum to go
into detail.

Questions and Answers

1.Q What are the advantages of the AUCC settlement with Access
Copyright?

A The model license provides long-term certainty
on price, and access to a new range of digital materials. Most importantly, it
respects the principles of academic freedom and privacy and ensures that the
administrative burden on institutions is minimized.

The price is very high – arguably too
high by a factor of several hundred per cent - to justify such “lock in”.

The model license does not provide
access to a new range of digital materials; it does not provide access to any
work to which a university has not already secured lawful access (s. 4(d)).

AC’s own chain of title to most digital
material is very doubtful.

AC will turn post-secondary institutions
into auditors and enforcers on its behalf.

2.Q Is the fee of $26 per FTE a reasonable rate?

A The fee reflects current market rates under other copying
agreements between universities and copyright collectives. For example, the
current photocopying licence between the Quebec collective Copibec and Quebec
universities requires payment of an annual fee of $25.50 per Full-Time
Equivalent (FTE) Student. In addition, the agreements signed recently with
Access Copyright by the University of Toronto and Western University, which
also cover paper and digital copies, require annual payments of $27.50 per FTE.
It is very unlikely that the Copyright Board will certify a final tariff fee
for universities that is significantly lower than the market rate negotiated by AUCC.

Prices imposed by a publishers’ collective
cartel that uses the Copyright Board proceedings as a threat are not “market”
prices.

The Copibec rate derives from a
distinct regime in which many aspects are not applicable outside of Quebec.

The UofT and Western deals are highly
controversial. Few persons other than those directly responsible consider these
to be “good deals” or reflective of a “market rate”.

The fact that the Board may yet certify
a higher tariff is a self-fulfilling prophecy.

A good benchmark for what is the “market”
price is what the Copyright Clearance Center (“CCC”) charges universities in the US. In most cases
it is zero because very few universities purchase blanket licenses from the
CCC. Where licenses are in place in the
USA, they are typically
about $3.75 per student per year.

3.Q With the apparent decline of the use of course packs, should
the fees have gone

down from the amounts paid under the photocopying licence with
Access

Copyright?

A There has been a significant migration of copying for course packs
to digital copying for use on course websites. The AUCC model licence allows
digital copying to fill gaps in the coverage of the digital site licences that universities have signed.

The photocopying licence with Access Copyright did not cover digital
copying.

AC is believed to have very limited
rights to deal with digital copying on
behalf of third parties.

Most institutions already pay a lot of
money for licenses that allow for digital copying. How many times do they need
to pay for the same thing?

Note all the restrictions on Digital
Copies in s. 5 – most notably the obligation to destroy any Digital Copies of
Repertoire Works stored on a Secure Network if the license should expire.

4.Q Who will pay the fee of $26 per FTE?

A In certain provinces, institutions must absorb the fee because of
provincial restrictions on

increases in student fees. In other jurisdictions, either the institution
or the students, or a

combination of the two, will pay the fee depending on local
arrangements.

True. But this totally begs the
question of why AUCC took upon itself the right to effectively mandate a “one
size fits all” regime that will in many cases pass along costs to students with
no effective voice and in many other cases impose large costs on AUCC members that
were not consulted at all.

5.Q Does the definition of “Copy” in the AUCC model licence mean
that AUCC accepts that posting a hyperlink to a digital copy is the same as
authorizing the making of a copy and requires a licence?

A Despite the ruling of the Supreme Court of Canada in a recent
defamation case, Crookes v. Newton, it is still an open issue in Canadian law
whether posting a hyperlink could make a person liable for authorizing the copying of the digital work. The
definition of “Copy” in the model licence makes the licence and the indemnity very broad in
scope. Another provision in the model licence clarifies that AUCC has
accepted this definition on a “without prejudice” basis and reserves the right to take a different
position on the meaning of the term in any other proceeding.

It would be very surprising if a
Canadian court were to hold that mere linking could possibly give rise to
“authorizing the copying of the digital work”. If this wasn’t obvious before the 2011 Supreme
Court of Canada decision in Crookes v. Newton, it should be quite clear by now.

AUCC reserves the right to take a
different position in other proceedings? That is ironic, given AUCC’s handling
of this proceeding. It does not explain why AUCC would agree, even in a
qualified way, to an important legal conclusion that is, at the very least, almost
certainly invalid.

6.Q Does the model licence require that royalties be paid for
copying that may be done without permission, e.g. fair dealing?

A The payment under the licence is not for copying that may by [sic] done
without permission. The preamble on the first page of the model licence states
clearly that the licence does not apply to copying under fair dealing or any
other statutory exception. Nor does the licence payment cover uses that are
licenced directly from publishers or other copyright collectives.

We must take AUCC’s word for this.
However, this defies the apparent facts. What we do know is that 8 years
following the CCH v. LSUC decision from the Supreme Court of Canada that
explicitly recognized “large and liberal” “users’ rights” re fair dealing, AUCC
has, for whatever reason, conceded that the basic rate should go UP by 800% and
not down by an appropriate multiple.

It is clear that, for practical
purposes, the model license greatly weakens the concept of fair dealing and users’
rights. The model license offers very little, if anything, beyond what
universities are already permitted to do under the licenses that they have in
place and under fair dealing, and any university who signs the model license
will have to ensure compliance with the license provisions that may be much
more narrow than fair dealing rights.(e.g. the right to permanently store
electronic copies for research and private study, when this would be “fair
dealing”).

We also know that fair dealing
shrinks from disuse. Most American universities, which are normally eager to
assert their rights, don’t have any agreement with an organization such as AC,
and those that occasionally obtain licenses from the CCC pay fees that are
miniscule in comparison.

7.Q Would it have been better to wait until after Bill C-11, the
Copyright Modernization Act, becomes law and the Supreme Court of Canada rules on fair
dealing in K-12 schools before AUCC settled with Access Copyright?

A Bill C-11 and the upcoming Supreme Court decision on fair dealing
are unlikely to affect the need to secure a licence for copying required
readings for students for inclusion either in course packs or on course websites. Required readings is the
principal category of copying covered by the model blanket licence agreement.

The imminently pending Supreme Court decisions
and and enactment of Bill C-11 are clearly and crucially relevant to the issues at hand. Given
the decisions to date by the Copyright Board and the Federal Court of Appeal in
the K-12 case and this case, things almost certainly will only get better when Bill
C-11 passes (which expressly includes “education” as a fair dealing purpose)
and the Supreme Court K-12 decision has been delivered. That decision will almost
certainly deal with whether copying “required” or prescribed readings is ipso
facto unfair, as the Copyright Board ruled, and other directly relevant issues.

The fact that the AUCC believes that
Bill C-11 or the Supreme Court ruling will have little effect on what
universities are doing is astonishing. AC
itself clearly believes otherwise, as shown by their enormous lobbying efforts
and the positions taken by AC and its supporters in the Supreme Court.

8.Q Will the proposed survey under the AUCC model licence permit
Access Copyright to

monitor the electronic correspondence of students and faculty?

A The proposed survey under the AUCC model licence will respect the
principles of academic freedom and privacy. The agreement explicitly states
that the survey will not provide access to chat rooms or e-mails of the AUCC
member, or of its students or academic staff. The Copyright Board tariff
proceedings would likely have required more onerous and invasive disclosures of
information.

AUCC still has some basic issues to work
this out with AC on this pursuant to clause 11 of the model agreement. Given recent events, do institutions still
trust AUCC to represent their best interests and to bind them on this
fundamental issue that could generate grievances galore by faculty?

Why did the AUCC effectively concede
that the Board would have the power to require more onerous and invasive
measures instead of challenging this assumption and stand up for the rights of
educators?

A The AUCC model licence increases access to educational material by
providing the right to copy a new range of digital materials that were unavailable under the
previous photocopying licences. For AUCC members that had opted out of the Interim Tariff,
the model licence agreement will allow the digital copying of works for which they were
unable to obtain transactional (pay-per-use) permission from the copyright owner.

The transactional license issue is
quite possibly ultimately winnable – but the setbacks to date have seriously prejudiced
AUCC members.

Direct licensing - including with AC when it has the necessary
rights – would be far more efficient for both users and author/publishers.

10.Q Is there an advantage to having the AUCC model licence
continue until December

31, 2015, two years after the first Access Copyright tariff
ends?

A The longer term gives AUCC members and their students certainty in
the royalty rate for a longer period than the term of the tariff. It also provides AUCC
members with a longer period in which to establish appropriate copying policies and
procedures, and to ensure that faculty, staff and students comply with those policies and
procedures.

Not to mention a longer period of time
for AC to get entrenched as a Copyright Board regulated monopolist and to use revenues
from its 800% increase to seek yet higher tariffs, lobby for narrower users’
rights, and build a war chest to further intimidate administrators of any
university that decides to take its users’ rights seriously.

11.Q Why was AUCC unable to consult with its members during the
negotiation of the

model licence?

A The AUCC negotiating team members were under strict confidentiality
in a framework

agreed to by both the AUCC and Access Copyright Boards of Directors.
Neither AUCC nor Access Copyright was permitted to share information about the
negotiations with their respective members.

This answer is frankly completely
circular. It seems that AC had to keep everyone in the dark because it agreed
to keep everyone in the dark.

Given that this is a “negotiated settlement”
in a context that puts immense pressure on universities to accept, it is
surprising that AUCC members were simply informed after the fact.

12.Q Why has AUCC dropped its opposition to the tariff?

A It is unlikely the Copyright Board will approve a tariff fee for
universities that is significantly lower than the market rate fee negotiated by
AUCC. In addition, the Copyright Board has already ruled against AUCC’s request
that it amend the Interim Tariff to add a transactional licence, and the courts
refused to intervene on the basis that the decision of the Copyright Board is
an interim decision.

For many reasons, some of which have
been suggested, this is far from being a “market rate”. The fact that AUCC has
agreed to a model license that supposedly reflects “market rates” will indeed
make it very difficult for dissenting universities to do better at the Copyright
Board. Such dissenters would need to show that these rates are not “market
rates”.

As indicated, if AUCC had provided the
necessary evidence at the right time, it might have been possible to have dealt
successfully with the transactional license issue. However, this is not what
happened.

While some may blame UofT and Western
for setting the precedent, Paul Davidson has admitted that the decision to cut
a deal was made before the UofT/Western deal was announced.

If AUCC had secured AC’s consent to
withdraw the tariff application
regarding AUCC’s members, then the institutions that don’t want the
model license would have the clear option of continuing on an “opt-out” basis.
Instead, AUCC agreed to AC’s pressure tactics that are intended to secure an effectively
mandatory and even more onerous certified tariff at the end of the day.

13.Q Why was it important for AUCC to negotiate an agreement
now?

A The recent decision of the Federal Court of Appeal not to intervene
in interim proceedings of the Copyright Board meant that the Board's previous orders for
AUCC members to provide information relevant to the proceedings became binding. Had
AUCC not reached agreement with Access Copyright on a model licence, AUCC members
would have been required to embark on an invasive, time-consuming and expensive work
to respond to interrogatories and likely participate in an onerous survey.

AUCC failed initially to even try to
seek review of the interim tariff. (This was no ordinary “interlocutory” or “procedural”
matter. It raised serious jurisdiction and fairness issues that might have resulted in a successful judicial
review application). AUCC could have limited the need for interrogatory responses
to only a representative sample of its membership, as the Board itself
suggested. It did neither.

Again, the AUCC concedes that the
Board has powers that it may not actually possess, if challenged.

In any case, this seems to contradict
Q&A #15 below.

14.Q What is the purpose of the retroactive payment provisions
under the model licence?

A AUCC negotiated a fair retroactivity formula in the agreement with
Access Copyright that provides for very deep discounts to payments for the use of digital works
that was not covered by the Interim Tariff and to cover the value of the
indemnity, which is retroactive back to January 1, 2011. This indemnity provides an additional degree
of retroactive protection for inadvertent infringement involving works within Access
Copyright’s repertoire.

All AUCC members have either been
paying under the interim tariff or direct licensing on their own after opting
out. There is arguably no need and no good justification for ANY retroactive
payments.

It appears that the retroactivity
discounts are simply part of the pressure tactics to which AUCC unfortunately agreed.

15.Q Can the Copyright Board order institutions that do not sign
licences with Access

Copyright to respond to interrogatories or participate in a
survey of copying?

A Because AUCC has withdrawn from the Copyright Board proceedings,
the Board no longer has any jurisdiction to order AUCC to secure responses from its
member institutions to interrogatories or their participation in a survey. AUCC members are
not parties to the proceedings. In previous proceedings the Copyright Board has ruled
that its powers are not unlimited, and that it probably does not have the power to order
non-parties to the proceedings to answer questions or to participate in a survey,
otherwise than by ordering them to appear at the hearing as a witness under a subpoena. The
Copyright Board has never
exercised its power to issue a subpoena.

AUCC could have limited the need to
respond to interrogatories in the first instance to a small sample of its members
as the Board itself suggested, but made no attempt to do so.

The Board is presumably still
expecting a report on May 7, 2012 on the progress of a negotiated survey. This
was promised
to the Copyright Board by AUCC counsel on April 16, 2012 - the same day the "negotiated settlement" was announced

AUCC has put its members in an
apparently paradoxical and very difficult position here. It seems to suggest on
the one hand that the Board lacks the power to make rulings on interrogatories
and surveys that are apparently in the works binding on individual institutions.
Even if this is right, it fails to address the fact that the Board’s apparently
intends to proceed on a default basis at the instance of AC and with
AUCC’s blessing to certify what will surely be a harsh tariff, if there is no voice for the dissenting universities
in the Board hearing.

AUCC does not begin to address the
very serious practical, financial, and legal difficulties that its abrupt
withdrawal from the Board hearing will cause to its membership today, tomorrow
and well into the future.

CONCLUSION

AUCC would still seem
to have many questions to answer to its dozens of members that this Q&A
does not even begin to address.

However, now is the
time – and potentially an existential moment in time at that - for damage
control and, if so desired, a counterattack by dissenting institutions. Further
questions and answers will have to come later.